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Pundits question economic value of oilsands
News Articles Featured | Toronto Sun | February 04, 2011
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As interest in Canada’s oilsands from foreign investors swells, new questions are being raised about the economic benefits of Canadian crude outside of Alberta.
World-renowned Canadian activist David Suzuki published a commentary on Thursday challenging the concept of so-called “ethical oil.”
Soon-to-be SUN TV host and QMI Agency columnist Ezra Levant has argued the oilsands are by far the world’s most ethical source of fuel because — unlike other major oil producing nations Saudia Arabia, Sudan, Nigeria, Iraq and Venezuela — Canada does not have a track record for human rights abuses, bad labour practices, corruption and poor environmental policies.
Levant compares the oilsands to fair trade coffee, which guarantees a fair wages and conditions for the workers, and to Canadian diamonds, for which producers are able to charge a premium for their ethical qualities.
Prime Minister Stephen Harper has also used the term “ethical oil” to describe the oilsands.
Suzuki said the ethical oil argument “has holes as big as the one in the ground at Fort McMurray.”
The oilsands are responsible for about 5% of Canada’s greenhouse gas emissions and continue to be the country’s fastest source. The oilsands also disrupted the surrounding Boreal forests, use massive amounts of water and pollute the air and waterways.
Suzuki also questioned the ethical nature of the companies operating in the oilsands, including Exxon Mobil, BP and PetroChina.
He suggested energy from non-fossil fuels could be doubly attractive to foreign buyers if it came from Canada.
Others question whether the oilsands contribute as much to the country’s economic prosperity as Ottawa suggests.
A report published by the Canadian Energy Research Institute this past October found the oilsands were responsible for just 1.5% of Canada’s gross domestic product for 2000. That number is expected to grow to 3% in 2020.
By comparison, the oilsands represent about 12% of Alberta’s GDP.
Only about 10% of the economic benefits spill out of Alberta. That means when you exclude the oil-rich province, the rest of Canada gets mere 0.2% blip in GDP thanks to the controversial oilsands.
“In the end, the only truly ethical solution is to phase out oil,” Suzuki said.
Meanwhile a separate Ernst & Young report on Thursday found Asian markets are clamouring for Canadian oil as China, Japan, Thailand and South Korea look to secure natural resources.
Last year, the number of inbound oilsands transactions from Asia tripled to hit $9.2 billion.
Canadian oil is hot right now because of rising oil prices, huge reserves, as well as a stable financial and regulatory environment among other things, said Lance Mortlock, a senior manager at Ernst & Young.
“To date, most investments have been in a non-operated capacity, but as foreign companies begin to take on operator roles, like in Korea National Oil Corporation’s acquisition of Harvest Energy in early 2010, various issues could surface,” he said.
Challenges could include foreign companies using their own trusted suppliers instead of sourcing local resources and acquirers unfamiliar with local laws and environmental guidelines.
Tagged with: alberta, canada, david suzuki, ezra levant
